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Statement of Cash Flows

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(Cash Provided by Operating, Investing, and Financing Activities)
The balance sheet data of Brown Company at the end of 2007 and 2006 follow.

2007 2006
Cash $30,000 $35,000
Accounts receivable (net) 55,000 45,000
Merchandise inventory 65,000 45,000
Prepaid expenses 15,000 25,000
Equipment 90,000 75,000
Accumulated depreciation-equipment (18,000) (8,000)
Land 70,000 40,000
$307,000 $257,000

Accounts payable $65,000 $52,000
Accrued expenses 15,000 18,000
Notes payable-bank, long term -0- 23,000
Bonds payable 30,000 -0-
Common stock, $10 par 189,000 159,000
Retained Earnings 8,000 5,000
$307,000 $257,000

Land was acquired for $30,000 in exchange for common stock, par $30,000, during the year; all equipment purchased was for cash. Equipment costing $10,000 was sold for $3,000; book value of the equipment was $6,000. Cash dividends of $10,000 were declared and paid during the year.


Compute net cash provided or used (Enter negative number in parenthesis for cash used, for example (20,000).) by:

(a) operating activities. $

(b) investing activities. $

(c) financing activities. $

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Solution Summary

The solution explains how to calculate cash flows from operating, investing and financing activities

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Statement of Cash Flows: Time for change! SFAS No. 95

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As contained in the Week Four electronic reserve readings article readings, this article, Broome, O. W. (2004, March/April). Statement of cash flows: Time for change! Financial Analysts Journal, 60(2), 16. , describes the current SFAS No. 95 requirements for the statement of cash flows, cites recent cases of abuse and disinformation involving the statement, and makes significant recommendations for improving the statement. Based on the comments in the article do you think the three sections of the statement of cash flows provide enough information for the reader? Of the three which provides the most information or is this an 'it depends' answer?

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